A bulldozer contracted by AshBritt, Inc. piles debris being collected in a temporary dump at the base of the Route 37 bridge in Seaside Heights in the wake of Hurricane Sandy's destruction.
(Photo by Tony Kurdzuk/The Star-Ledger)

TRENTON — When Gov. Chris Christie awarded a no-bid contract to a Florida debris removal company a day after Hurricane Sandy hit, the administration and its proponents said it was needed for a quick response to the disaster and stressed it was the best way for hard-hit towns to get the most aid from the Federal Emergency Management Agency.

But the move also has its risks for towns expecting tens of millions from the federal government, according to federal guidelines, audits and emergency management experts.

New Jersey faces federal rules that were toughened after FEMA was sharply criticized by Congress in the wake of Hurricane Katrina for allowing no-bid contracts that lawmakers said bilked taxpayers.

Because of this, FEMA and the inspector general of the Department of Homeland Security will take a long look at the state’s procurement process to determine whether taxpayers got the fairest rates. In other states, the federal government has recommended that towns it says spent too much should refund some FEMA aid — years after their cleanup.

Christie’s no-bid contract with Florida-based AshBritt Inc. — which gave the firm unequaled access to local towns stricken by the storm — borrowed wholesale, or "piggybacked" from the company’s 2008 contract with Connecticut to help speed up recovery efforts.

Citing an emergency, the state did not make competitive contracts for cleanup work available to local officials until late last month, about 90 days after Sandy inflicted historic damage. A total of 43 towns have operated under the no-bid contract for those three months, paying rates that were in many cases considerably higher than towns that did not hire AshBritt.

Experts say New Jersey could be vulnerable to scrutiny from the federal government because FEMA discourages state and local governments from "piggybacking" other contracts, warning they are the equivalent of a no-bid contract — and prefers that work be put up to bid as quickly as possible. The agency says it stresses this because contracts put up for bid generally save taxpayers money.

The Christie administration says it’s followed all the rules and is confident towns will get their full reimbursement.

Ernest Abbott, a Washington-based attorney with FEMA Law Associates, a private firm, who has been practicing disaster relief law since 1997, said FEMA pays special attention to the rates, and the agency will compare the reimbursement applications submitted by individual towns and cities to help draw some conclusions.

"After the storm, FEMA is going to see a whole different assortment of debris removal prices," Abbott said. "I would be surprised if those that were much higher than the rest didn’t get any special attention."

Susan Greatorex, a FEMA spokeswoman, said last week the agency has yet to determine whether AshBritt’s prices are "fair and reasonable," saying those conclusions will be made in the months ahead as towns submit for federal reimbursement.

Maggie Moran, a Democratic political operative who was former Gov. Jon Corzine's chief of staff and campaign manager, has emerged as force in helping AshBritt Inc. land lucrative debris removal contracts in towns stricken by Hurricane Sandy. Here, she greets Gov. Chris Christie as he visits Belmar for the groundbreaking of the borough's new boardwalk last month in the wake of Hurricane Sandy.Andrew Mills/The Star-Ledger

FUNDING AT RISK

FEMA officials warn in published guidelines that by "piggybacking" on other contracts, states and local governments may end up adopting rates that may not be "fair and reasonable" and they could inherit any problems that may exist in the borrowed contract.

"FEMA encourages applicants to avoid ‘piggyback’ contracts," FEMA wrote in power point presentation prepared for local officials. "Even though they may be legal, the use of such contracts may jeopardize FEMA funding. If FEMA determines that the use of such contracts has negatively impacted any federal procurement requirement, most specifically the requirement to compete, your funding could be at risk."

When the state did go out to bid last month, AshBritt’s prices in key areas were significantly higher — sometimes more than three times as much — than the three other firms that won work.

Christie spokesman Michael Drewniak dismissed any suggestion that the governor’s actions may threaten reimbursements as "incomplete and grossly speculative, at best." He said the administration has fully "briefed and engaged" FEMA officials, lawyers and representatives from the Office of Inspector General all along.

The administration chose the Connecticut contract because it is "regionally comparable, both economically and geographically," Drewniak said. The Connecticut towns that used AshBritt saw the maximum reimbursements by FEMA, and Drewniak said New Jersey towns can expect the same.

He said, for example, that Ocean County administrator Carl Block had consulted with FEMA officials before offering to pay the upfront debris removal costs for towns that wanted to participate in the state’s contract. FEMA told Block that the cap on debris removal costs after Hurricane Irene in 2011 was about 24 percent higher than what AshBritt is charging now, Drewniak said.

"We are confident that these facts for prior, recent reimbursements, among other factors, remain reliable in anticipating the FEMA ‘reasonableness’ standards, which include regional market history," Drewniak said.

In recent actions, the federal government went after local governments after reviewing cleanup costs. FEMA has not sought money from contractors like AshBritt.

In 2011, the inspector general with the Department of Homeland Security recommended that FEMA recoup about $4 million in federal aid to a tiny coastal town in Louisiana that borrowed a contract from a nearby parish. The reason: The town never considered whether the adopted contract had "reasonable costs" and the inherited contract had problems. In several other cases, FEMA reimbursed at a lower rate than the local town was charged by the contractor, records show.

COST COMPARISON

Colts Neck was one of the few New Jersey townships that bid out the work right after the storm, taking advantage of the emergency declaration to do it informally, through phone calls, according to township administrator Robert Bowden. The town went with Florida-based Bergeron, which offered to the work for $11.70 per cubic yard, about half of AshBritt’s rates, he said.

In the end, the town paid Bergeron $753,959 to remove about 64,000 cubic yards. If AshBritt was hired, the same job would have cost $1.36 million, Bowden said.

Abbott said FEMA requires contracts to be competitively bid with exceptions, such as an emergency. Even then, Abbott said towns are only allowed to use no-bid contracts for a short time after the event to clear roads and to remove any threats to public safety. "Just because there is a declared emergency, it doesn’t mean you don’t have any competitive bidding obligations," he said.